'Scotch bond' to spirit up £188m

A SCOTTISH company has found a novel form of collateral to help raise more than £188m - Scotch whisky. Glasgow-based Kyndal International, maker of Whyte and Mackay, is reportedly preparing to pledge casks of maturing whisky in its cellars as backing for a substantial bond issue in mid-April.

The aim is to refinance last October's $290m (£203m) buyout of distilleries from Fortune Brands of the US. The sale of the bonds would raise cash to repay a £188m loan from WestLB. Investors would be paid from the proceeds of future whisky sales.

Kyndal would not be the first to use alcohol as security for a bond issue. Marne & Champagne of France used 60m bottles of bubbly in various stages of production to raise e396m (£242m) two years ago.

The vogue for securitisation has enabled companies to issue bonds backed by any number of income streams, from future credit-card repayments to sales of David Bowie songs.

Analysts at WestLB Panmure said securitisation of whisky stocks could become more commonplace, and cited Allied Domecq, Diageo and Glenmorangie as potential candidates. Kyndal declined to comment.